Tuesday, April 22, 2008

A Conversation with Cinetic: Today's Market for Digital Rights

I spent some time on the phone today with three of the folks involved in building Cinetic Media’s new digital rights group, called Cinetic Rights Management. They wanted to supply a bit more background on the group, which seeks to help indie filmmakers wring the most possible value from their work by selling it to satellite companies, Internet portals, mobile phone operators, etc. (I’d posted last week about Cinetic’s hiring of Matt Dentler and some of the deal terms they’d been dangling before filmmakers.)

First thing: they didn’t dispute the deal terms I’d seen them offering to filmmakers last year (a 50-50 split of revenues after some expenses are taken off the top, like digitally encoding the film, and a 10-year exclusive contract to be represented by Cinetic.) But Cinetic’s Christopher Horton did say that terms are negotiated “on a case-by-case basis.” Horton said they’ve signed up “about 100 films” so far.

Janet Brown, the chief operating officer of CRM, said that the long-term arrangement is important to Cinetic because of the “unproven revenue model in this space”; the resources CRM will commit to marketing a film; and the logistics of encoding films and collecting info about how well they’ve performed in each distribution channel.

But what happens, I asked, if a filmmaker signs up with Cinetic and something goes awry? Cinetic might not find any buyers for the film, or might get out of the digital business in five years. Horton quipped, “This could be our only business in five years.”

Still, when Cinetic reps a film at Sundance or another festival, a filmmaker might sign a year-long exclusive with the firm, or even shorter. There’s a big difference between that and a decade. But the CRM team contend that they’ll be able to do a lot with a film’s rights over that period of exclusivity, as digital markets develop. “Having a sales agent for your digital rights is going to be even more important than a conventional sales agent” handling theatrical and home video distribution, Horton predicted.

Brown explains that CRM will market films to Internet portals like iTunes, Joost, and Jaman; satellite companies; cable companies; telcos; and wireless operators. They’re interested in repping not just new films, but high-quality older films where the rights have reverted to the filmmaker.

I noted that the big kahuna in terms of Internet sales (and now, rentals) seems to be Apple's iTunes marketplace. The CRM trio seemed to agree. They noted that, working with New Video, they helped cut the deal with iTunes to premiere Ed Burns’ “Purple Violets” there last year. (No data is yet available, they said, on how well it has performed.) And Brown said they’re “in discussions now to finalize our deal with [iTunes],” adding that CRM has “a very good relationship” with Apple.

Most of the deals CRM is seeing offered are so-called “consignment” deals: give us the movie, and we’ll give you a share of the revenues it produces. But CRM hopes that some films, in some digital outlets, will receive advances – especially when they’re offered to one outlet on an exclusive basis.

It can take a while for these Internet outlets to produce revenues, Horton explained. “We never tell filmmakers, we’re going to make you a heck of a lot of money through Jaman, Joost, and Netflix over the next twelve months. We’re focusing on the long-term,” he said.

A main emphasis in CRM’s dealings with filmmakers, it seems, will be helping them make sense of the growing number of digital distribution options – and freeing filmmakers up to get started on their next project, without spending years marketing their last one.

“Not every filmmaker has the time or inclination to do what Lance Weiler or the Four Eyed Monsters guys have done,” Brown said.

“Most independent filmmakers out there are still unaware of the opportunities,” said Dentler. "They’re so busy being filmmakers, engrossed in their project, that they don’t see the bigger picture, the bigger landscape.”

‘Four Eyed Monsters,’ he observed, came out in 2005, and directors Susan Buice and Arin Crumley “still haven't made another film. Hopefully, with our resources we can help filmmakers focus on continuing their careers.”

8 Comments:

"they helped cut the deal with iTunes to premiere Ed Burns’ “Purple Violets” there last year. (No data is yet available, they said, on how well it has performed.)"

right. this means either apple isn't reporting the numbers (i've heard they only report every 6 months, which is ridiculous), or it didn't do well and no one wants that known. either way it's ridiculous in this age of instant weekend box-office and web page views that we don't have a better idea how movies are selling online.

i agree with deepstructure on this. my first thought was that if they're not releasing stats, it's because they're not very good.

while i agree in principle that it is essential for independents to have some distribution channel, I can't help but feel like what's on offer here has an element of sleaze to it. 10 years exclusive rights? There is no reason why they would need that much and you'd be foolish to take them up on it, especially given the pace that things are going at the moment, it might be possible to distribute your own film within a couple of years. It's also a bit suspect that they offset the cost of encoding but offer no details as to exactly what that involves- I would presume that's something they do in-house by the way.

Based on what I've read here, you'd have to be a compete idiot to sign with CRM unless you look at your film as a joke that you really don't give a crap about.

This article doesn't address what cinetic plans to do about their 100 films they've already signed existing in obscurity. Thats what needs to be solved guys, not the digital mechanics and payment mailing address. That stuff is easy and any producer/filmmaker that can rent a lighting package and make a production schedule can figure out where the money goes when a download sells.

What they are offering has insanely low value and they are asking for insanely high value in return. They mine as well put up a billboard that says, "Your movie is a piece of shit so you mine as well give it to us on the off chance someone discovers it and it blows up, that way we'll get half the money because we encoded it."

Do video editors not have Quicktime Pro???!!! Does pay pal not exist??!!! Is the internet not a democratic playing field that doesn't require gate keepers!!????!!

If you have a film the best thing you can do is put forward the minimal effort of getting an audience for that film and right now the only easy way I know to do that is through From Here to Awesome. Thats why we started it. So check out at: http://fromheretoawesome.com and submit your films, we currently have a grace period even though the submission deadline has passed.

Our company, Indie Rights (a subsidiary of our production company, Nelson Madison Films), does the same thing as Cinetic, but we don't take exclusive rights, because we feel that filmmakers should be able to do what they want with their films, besides what we do for them. Many will do nothing, but some will do some things. We do a three year deal and only take 20% of revenues received from digital platforms (without deducting expenses). We encourage filmmakers to be pro-active, do what they have time to do themselves, for example - put their films on their own websites if they have one, put their film up on Amazon/Unbox. We focus on sites that don't really consider individual films like EZTakes, CinemaNow, etc. and have blanket agreements with most digital platforms. That way, filmmakers have a choice about how much they want to do vs. how much they want us to do. It's time for filmmakers to take some responsibility for understanding the distribution business, so they don't give away their films. The point is to become self-sufficient through your filmmaking at some point. While the revenue stream isn't much right now, it is growing and will get there eventually.

About

CinemaTech focuses on how new technologies are changing cinema - the way movies get made, discovered, marketed, distributed, shown, and seen. (With occasional forays into other parts of the entertainment economy.) You can also follow CinemaTech on Twitter (@ctechblog).

About Me

For about the last ten years, I've been writing about innovation for publications like the Boston Globe, the New York Times, Wired, Variety, Fast Company, the Hollywood Reporter, Salon.com, BusinessWeek, and Newsweek.
I helped start (and continue to help run) three conferences: Future Forward, the Nantucket Conference on Entrepreneurship & Innovation, and Convergence: The Life Sciences Leaders Forum. I also often speak and moderate at other people's conferences, and serve as a commentator on TV and radio. (Which beats actual work.)
You can reach me by e-mailing kirsner - at- pobox.com. My personal site is www.scottkirsner.com.